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Bank of Montreal exec loses appeal to amend wrongful dismissal claim to include unjust enrichment

by HR Law Canada

A former senior executive of the Bank of Montreal who was terminated without cause had an appeal dismissed by the Ontario Division Court last week. The appeal stemmed from a motion seeking to amend the statement of claim in a wrongful dismissal suit.

The initial claim sought damages totaling about $17 million — including 36 months’ reasonable notice. At a later stage, the appellant moved to add an additional claim of $10 million for unjust enrichment, or alternatively, a claim for disgorgement of profits. This motion to amend was rejected, leading to the current appeal.

The appellant, who had been with the Bank of Montreal from 2002 to 2019, held the position of Managing Director, Head of Global Structured Products at the time of his termination. At the time of termination, his base salary was $275,000 and participation in a number of incentive and other programs.

In the three years prior to his dismissal, he had received over $4 million in total compensation annually, largely due to incentive payments.

In the wrongful dismissal claim, the appellant sought several potential forms of relief, including:

  • $2.5 million for unpaid incentive compensation for 2019 up to his dismissal.
  • $15 million for compensation during what he argued was a reasonable notice period of 36 months.
  • Damages to replace lost employee benefits, including health and pension, during the notice period.
  • Reimbursement for expenses tied to job search efforts after his termination.
  • $250,000 in general damages.
  • Interest on the amounts, either based on his personal rate of return on investments or at default rates provided in the Courts of Justice Act.

The appellant’s request to include an additional claim for unjust enrichment, which would focus on the respondent’s return on equity earned from the amounts allegedly owed due to wrongful dismissal, was particularly contentious.

In assessing the motion to amend, the motion judge noted that any amendment to pleadings should be granted unless there’s clear evidence it would be “completely impossible of success.” In examining the unjust enrichment claim, the judge referenced the Supreme Court’s criteria, emphasizing that three elements must be present:

  • a benefit to the defendant;
  • a corresponding deprivation to the plaintiff; and
  • no legal justification for the benefit received by the defendant.

In this case, the motion judge found that the element of “corresponding deprivation” was not met. Further elaborating, the court stated, “Given the interest regime in the [Courts of Justice] Act, compensating for the time value of money, it cannot be said that justice and fairness require the growth of unjust enrichment.”

Regarding the disgorgement claim, the court found that the claim could be compensated for by the payment of money, hence, disgorgement was not warranted.

The appeal was dismissed with costs to the respondent, the Bank of Montreal, in the agreed-upon amount of $24,000, all inclusive.

For more information, see Chaudry v. Bank of Montreal, 2023 ONSC 4829 (CanLII)

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